New HBW Ollison Hydraulic Fracturing Report

HBW Resources: Ollison Hydraulic Fracturing Report

Below is a summary of publicly available activities currently underway at the federal, state and international levels that could impact the use of hydraulic fracturing for oil and gas extraction.  With numerous state legislatures now in session, HBW Resources is monitoring these activities to ensure that responsible and feasible policies based on sound science are advanced.

States 

State Legislative Update: Please see linked spreadsheet for an updated listing of state legislation dealing with hydraulic fracturing.

California
The U.S. District Court for the Northern District of California deadlines for the federal government and environmental activists to propose a remedy to its March finding that the BLM had failed to consider the risks of hydraulic fracturing when it leased 2,700 acres for oil and gas development in the state. The court issued the briefing order on May 15th, giving the parties until June 3rd to file their opening brief, the defendant until June 25th to file a response, and the plaintiffs until July 9th to file a reply brief. A hearing on the remedy was also set for July 16th. In the March 31st decision, the court rebuked BLM for not taking a “hard look” at the impacts of hydraulic fracturing, as required under NEPA, when it sold oil and gas leases totaling 2,700 acres of federal land.

Hydraulic fracturing will be the subject of the Greater Bakersfield Chamber of Commerce’s “Good Morning Bakersfield” business breakfast from 7 to 8:30 a.m. July 29 at the DoubleTree by Hilton, 3100 Camino Del Rio Court. The event is to feature presentations by representatives of the state Department of Conservation, the Western States Petroleum Association and Energy-in-Depth, among others. Attendance costs $45 for chamber members and $75 for non-members. A table of 10 costs $550. For information, call the chamber at 327-4421.

Colorado
Colorado is pledging stricter enforcement of its hydraulic fracturing chemical disclosure rules, after letting many companies miss deadlines for the first year of mandatory reporting. The move came less than two weeks after EnergyWire reported that more than one-fifth of the reports filed to FracFocus for Colorado and Pennsylvania wells last year were late, and that neither state has penalized companies for missing deadlines. The state requires reports to be filed to FracFocus within 60 days of a frack job. The Colorado Oil and Gas Conservation Commission warned companies it will begin “active enforcement” July 1. The commission’s notice, dated June 20, said there could be fines of up to $250 a day, though “first-time violations will be considered less serious.” For more information please contact HBW Resources.

The Colorado Court of Appeals (Case No. 2013 COA 106) overturned a Lone Pine order and a dismissal order issued by the lower court in the case of Strudley v. Antero Resources Corporation, Antero Resources Piceance Corporation, Calfrac Well Services, and Frontier Drilling LLC (Case No. 2011-cv-2218, Denver County District Court), remanding the case back to the trial court for further proceedings. The plaintiffs complained that the defendants’ natural gas well activities, including hydraulic fracturing, had contaminated their water supply. The Lone Pine order issued by the court required the plaintiffs to make a prima facie showing of exposure, injury, and specific causation by providing expert affidavits from doctors, contamination reports and other information relating to the identification and quantification of hazardous substances to which each family member was exposed from defendants’ operations, as well as how long and at what concentration levels. The plaintiffs submitted the affidavit of a doctor who, although never examining the family members, concluded that “sufficient environmental exposure and health information exists to merit further substantive discovery.” The lower court found this affidavit to be insufficient and ordered the case dismissed, leading to the appellate review of the two orders. The Colorado Court of Appeals reversed. The court cited two primary reason for doing so. The first was anchored in two Colorado Supreme Court cases that the court interpreted as standing for the proposition “that a trial court may not require a showing of a prima [facie] case before allowing discovery on matters central to a plaintiff’s claims”. Second, the court cited differences between Colorado Rule of Procedure 16 and Federal Rule of Civil Procedure 16. (Federal courts often cite to Fed. R. Civ. P. 16 as the basis of their authority to issue Lone Pine orders.) The court further held that, even assuming it was writing on a blank slate, unlike the majority of cases allowing Lone Pine orders, this was not a mass tort case nor was it “any more complex or cost intensive than an average toxic tort case.” The court saw this lawsuit as simply a case involving four family members suing four defendants over alleged pollution of one parcel of land, making the Lone Pine order unnecessary. The court did note that at least one other court issued a Lone Pine order in a case involving only a few parties. See Pinares v. United Techs. Corp., No. 10-80883, 2011 WL 240512, at *1-2 (S.D. Fla. Jan. 19, 2011).

Opponents of hydraulic fracturing have turned in petitions seeking to ban the practice in Lafayette. The petitioners, led by citizen group East Boulder County United, turned in 2,042 signatures in support of a citywide vote on the Lafayette Community Rights Act, which includes a ban on hydraulic fracturing within city limits and would prohibit the disposal of associated waste products inside Lafayette. The city clerk’s office is verifying whether at least 948 of the signatures are valid before the measure can go to voters in November. For more information please contact HBW Resources.

Protect Our Loveland, submitted petitions to allow voters the opportunity to choose whether to stop oil and gas development for two years in city limits while staff members do further research into the health and environmental effects the process creates. Loveland City Council members will have two choices: place the measure on the ballot or enact the moratorium without a vote. The second option is unlikely, however, because City Council members voted earlier this year to create a regulatory system in which oil and gas producers can receive necessary permits to conduct their operations.

A recent Frack-Free Colorado meeting in Boulder discussed the next steps toward a statewide fracking moratorium or ban on the practice. Organizers said that before November 2014, petitioners would need to collect about 86,000 signatures to get a measure on the state ballot. They would need to have ballot language approved by the state and overcome any legal challenges the language may raise.

Illinois
With the recent passage and signing into law of SB 1715, the Illinois Department of Natural Resources (DNR) Director Marc Miller hosted a meeting regarding their schedule for hydraulic fracturing regulations with NGO’s, including the Grow-IL Coalition, the following timeline for regulations was provided:
·         Mid-October 2013: Draft rules will be provided to industry and the NGO’s
·         Industry and NGO’s will have 30-45 days to provide comments back to DNR
·         January 2014: The rules will be officially filed with the Secretary of State’s Index Division.  This will start the official 45 day comment period.
·         April 2014:  The Second Notice rules will be provided to JCAR in April (It could fall back to May or June if complex comments are offered)
DNR hopes to have the final rules completed within a year so that industry can begin making applications for permits. They indicated a need for 53 new employees that includes 11 attorneys, 20 well inspectors, and additional administrators, accountants, environmental experts, and others.  DNR noted that resources are available from a “sister agency” and that they do not plan to seek a supplemental appropriation from the General Assembly for regular staffing. DNR expects to have the “registration forms” available later this fall that can be completed but it is clear that applications for companies will not be available until the middle of 2014 at the earliest. For more information please contact HBW Resources.

Maine
Protesters are trying to stop the transportation through Maine of fossil fuels extracted through fracking in other parts of the country. Six protesters belonging to 350 Maine, an environmental group, were arrested after they tried to block a rail line to stop the delivery of hundreds of thousands of gallons of crude oil from fracking operations in North Dakota. Train deliveries of crude through New England, to an Irving Oil refinery in St. John’s, N.B., have become routine over the past year, according to rail and energy industry officials. Environmentalists also recently launched a campaign to get universities and nonprofits to divest their endowment investments in energy companies that engage in fracking.

Maryland
The Maryland Department of the Environment will present an overview of the draft report, Marcellus Shale Safe Drilling Initiative Study Part II Best Practices, at a public informational meeting on July 16, starting at 2:00 p.m. at the Maryland Department of the Environment, 1800 Washington Boulevard, Baltimore 21230.

Michigan
Experts on hydraulic fracturing will present both sides of the practice at a July 17 informational meeting hosted by the Ottawa County Planning Commission. The meeting will be held at 7 p.m. pm in the Main Conference Room of the Ottawa County Fillmore Street Complex, 12220 Fillmore St., West Olive, MI. The meeting is expected to conclude at 9 p.m. The seminar will include presentations from a local environmental consultant, the Michigan Department of Environmental Quality, the Michigan Oil and Gas Association, the Committee to Ban Fracking in Michigan, the law firm of Scholten Fant and the Michigan State University Extension. A question and answer session will follow the presentations. Individuals interested in attending are encouraged to RVSP by July 10 by contacting the Ottawa County Department of Planning and Performance Improvement by phone at 616-738-4852 or by email atplan@miottawa.org

Penske Truck Leasing announced it has ordered 100 compressed natural gas (CNG) Freightliner Cascadia tractors equipped with Cummins Westport 12-liter engines. The natural gas tractors will be used by Penske’s full-service truck leasing and commercial truck rental customers at various locations across the United States. Penske Truck Leasing estimates that before the year’s end it will have more than 200 natural gas tractors within its fleet for use by its full-service truck leasing customers and commercial truck rental customers. For more information please contact HBW Resources.

New Jersey
New Jersey Gov. Christie’s September 2012 veto of a bill prohibiting the disposal of out-of-state wastewater from hydraulic fracturing will not be considered by the state Assembly. Environmental NGOs pushed for an override vote, but the bill was held because proponents did not have the votes. Proponents argued that wastewater injected underground could contaminate drinking water supplies, but Governor Christie vetoed the bill, believing a ban was an unconstitutional restriction on commerce as all wastewater would come from out-of-state.

New Mexico
The federal government has given the green light to a proposal to build 234 miles of pipeline to transport natural gas liquids from one corner of New Mexico to the other and ultimately to markets in South Texas. The Bureau of Land Management’s approval of the Western Expansion Pipeline III project comes just a week after President Barack Obama unveiled his plan for combating climate change, part of which included boosting the role of natural gas in energy production. The $320 million project will transport natural gas liquid products from northwestern New Mexico to a hub in Hobbs in the southeastern corner of the state and ultimately to Texas to help meet existing and future demand. News of the pipeline’s approval encouraged oil and gas developers in New Mexico, which is home to portions of both the Permian and San Juan basins.

New York
The Green Party of New York state is reiterating its call for the complete criminalization of fracking. According to the Green Party, a law to criminalize fracking is not only wanted by the public but necessary due to fracking’s potentially destructive effects, not just on the environment, but on public health, economic stability and individual communities as well. The Green Party has been calling for the criminalization of fracking since 2010 and has since been fighting to help local leaders stop fracking in their own communities by way of home rule measures. For more information please contact HBW Resources.

North Carolina
Environmental activists blocked a chemical plant in what they said was a protest against the company’s sale of products used in the natural gas drilling process called hydraulic fracturing. Between six and 10 police officers and sheriff’s deputies were watching but taking no action against the protesters at the Momentive resin plant in Morganton, about 60 miles northwest of Charlotte. The blockade started after the plant’s employees had arrived for work, and production was able to continue during the protest. However, a tanker truck was stopped from leaving to deliver a shipment. Protesters erected the pair of three-legged, 20-foot-tall wooden structures at the plant gates. Each has a protester stationed on top, and their safety could be imperiled if they were forcibly removed or the tripod toppled.

North Dakota
North Dakota’s booming economy and low level of unemployment makes it a prime target for finding returns, with Hermes Fund Managers calling it an emerging market in a developed state. North Dakota’s low unemployment rate (just 3.2% compared to the US average of 7.6%) and its booming local economy makes it an emerging market in a developed country. The low jobless rate isn’t the only factor: North Dakota finds itself sat on a huge pile of Bakken Shale reserve, and produces 800,000 barrels of oil a day, making it the second biggest producer of oil in the US, behind Texas.

The North Dakota Industrial Commission’s July 15 crude oil production report will likely show a production increase of 12 thousand barrels of oil per day (bopd) from April to May, according to energy information provider Genscape. This production figure would represent a 65,000 bopd increase since the start of 2015 and a 170,000 bopd rise from this time last year. Genscape has seen significant production gains as weather has improved in June and July and completion activity has increased. Over the past two months, 65,000 bopd of production has been added in North Dakota, equivalent to production increases seen over the first five months of 2013. The company forecasts Bakken crude to keep rising with 127,000 bopd added between May and year-end 2013. Genscape estimates production will reach 1.1 million bopd by the end of 2014.

Ohio
Carroll County Energy LLC intends to build a 700-megawatt plant that would be powered by natural gas from Ohio’s Utica shale. The $800 million investment is enough generation to provide electricity to 700,000 houses. The plant will provide up to 500 construction jobs and will employ 25 to 30 workers when completed. Construction would take two to three years. It will produce 50 percent of the carbon dioxide and less than 10 percent of the sulfur dioxide and nitrogen oxide that would have been produced by a coal-fired plant, the company said.

Hilcorp Energy Co. is planning to drill two more horizontal oil and gas wells at its Carbon Limestone Landfill site in Poland Township. The Ohio Department of Natural Resources (ODNR) issued two new permits for Hilcorp to drill at the site, located on land owned by Republic Services, which operates the landfill. Hilcorp has drilled one well at the site and has permits for six additional wells including the two issued July 2 by ODNR. Hilcorp and NiSource Transmission have partnered to form Pennant Midstream LLC, which is building a $300 million pipeline and processing system — the Hickory Bend project — that extends from western Pennsylvania, through southern Mahoning County, and into Columbiana County. For more information please contact HBW Resources.

The Ohio Department of Natural Resources recently released new rules for operators applying for unitization. A part of the Ohio Revised Code, section 1509.28, “unitization” allows oil and gas companies to pool landowners across vast stretches of land that either can’t be contacted or who have no interest in selling the mineral rights below their property. Horizontal shale wells require lateral runs that extend thousands of feet deep underground. Typically, when a company applies for unitization, it indicates that it has plans to drill multiple wells from one pad, which requires more acreage. Multiple wells at one pad not only reduce surface disruption, but they also maximize the return of oil and gas.

EPA Region 5 is investigating whether an Ohio law requiring oil and gas companies to file reports with the Ohio Department of Natural Resources (“DNR”) also satisfies federal Emergency Planning and Community Right-to-Know Act (“EPCRA”) reporting requirements. The Ohio law does not require companies to report certain information about the chemicals used by oil and gas companies, and these reports do not go to first responders. An Ohio EPA representative said the agency is reviewing U.S. EPA’s letter, although all reports submitted to Ohio DNR are available to first responders through the agency’s website. The Ohio Oil and Gas Association stated that the inquiry is a non-issue, as companies using hydraulic fracturing techniques do not use enough chemicals to fall under EPCRA.

An Ohio State University policy brief, “Too Many Heads and Not Enough Beds: Will Shale Development Cause a Housing Shortage?” examines the impact of shale development on housing in Pennsylvania from 2007 to 2011, the first four years of Pennsylvania’s boom period, and uses that information to predict what Ohio can expect in the coming years. The policy brief was prompted by reports that surging numbers of shale-related workers in some areas of Pennsylvania resulted in doubling or tripling of market rents. For more information please contact HBW Resources.

pipeline project to move natural gas liquids from the Utica and Marcellus shale plays to the Gulf Coast has taken a step forward with the board of directors at Williams Companies Inc. signing off on the plan. The project calls for construction of a natural gas liquids pipeline from the Utica and Marcellus shale plays in Ohio, West Virginia and Pennsylvania to processing and storage facilities in Louisiana. Williams and Boardwalk disclosed the Bluegrass project in March, saying its first phase will provide oil and gas producers with 200,000 barrels per day of mixed natural gas liquid capacity. The pipeline could boost development of the Utica shale play, which oil and gas experts have said appears to be rich in gas liquids such as ethane, propane and butane.

A Boston-based company announced plans Tuesday to build a natural gas-fired power plant that will generate enough electricity to power 700,000 homes. The 700-megawatt Carroll County Energy project is planned for a 77-acre site some 2.5 miles north of the village on state Route 9, said Jonathan W. Winslow, director of development for Advanced Power North America. The $800 million plant would employ up to 500 workers during construction, and about 30 full-time workers once completed, he said. The power plant still needs approval by the Ohio Power Siting Board, which can take up to a year, and would take up to three years to build, Winslow said.

There are a number of notable provisions not included in the $62 billion biennial budget signed into law recently by Gov. John Kasich. The governor’s long-sought increase in the tax rate on oil and gas produced via horizontal hydraulic fracturing isn’t there, though he says he’ll push that issue until an increase is approved by lawmakers.

Pennsylvania
Gov. Tom Corbett signed SB 259, introduced by Sen. Gene Yaw(R, District 23), regulating how oil and gas royalty information is to be provided to lessors. The legislation was originally promoted as an effort to bring more transparency to the deductions companies take out of royalty payments.  The new legislation only applies to people with existing oil and gas leases. It allows companies to combine land parcels for horizontal drilling, unless it’s explicitly prohibited in the lease. For more information please contact HBW Resources.

Holbein Inc. plans to excavate and sell shale rock from its new location in Buffalo Township. The township supervisors on Wednesday approved a permit allowing the extraction. Holbein also must be granted a permit from the state Department of Environmental Protection in order to sell the rock.

As the Delaware River Basin Commission (DRBC) met in Wilmington, one thing not on their agenda is any decision on natural gas drilling. But a group of natural gas leaseholders from Wayne County have threatened to sue the DRBC if the agency doesn’t act in some way on its own proposed drilling regulations at Wednesday’s meeting. The Northern Wayne Property Owners Alliance is an organization of landowners from Wayne County who together negotiated lease terms with two energy companies to drill for natural gas. The Alliance wants the Commission to either schedule a vote on proposed regulations, or step aside and allow state regulations to be enforced. More than two years ago, in December 2010, the DRBC released it’s proposed gas drilling regulations for the Basin. Public hearings and comments broke all records and illustrated the intense division over the issue. The DRBC published its revised draft regulations in November 2011 with a meeting scheduled that month to vote on the proposal. But the meeting was quickly cancelled after it became clear that the members of the Commission did not agree. Since then, the Commission has been silent on the issue.

UGI Penn Natural Gas customers’ bills should still be one-third lower than they were five years ago – even with a rate increase on June 1. Since the Marcellus Shale drilling boom started in 2008, the resulting bounty of natural gas has translated into savings for Pennsylvania customers. And Pat Creighton, a spokesman for the industry group Marcellus Shale Coalition, says it’s a trend nationwide. “We are flush with gas in the United States, and that is a direct benefit to the consumer,” he said. Based on the use of 89 mcf – 8,900 cubic feet – per month, the average monthly bill for a residential UGI Penn Natural Gas customer was $157.95 as of June 1, 2008, according to data provided by the company. After UGI’s 4.2 percent increase took effect on June 1, the average monthly residential bill is $96.67.

FirstEnergy Corp. was looking at its remaining coal-fired power plants along the Ohio River and West Virginia and considering whether to add boilers that would use natural gas. The move, which would be costly and take place over several years, would allow the power plants to generate electricity from natural gas as well as the coal that has come under intense environmental scrutiny in recent years. The plants included three in southwestern Pennsylvania. But instead the company has decided that it would close two plants, Mitchell Power Station and Hatfield’s Ferry  by October 9 and lay off as many as 380 employees and one of its coal plants, Bruce Mansfield Plant, would instead be retrofitted with equipment that will reduce their emissions to levels that are required under existing and potential federal regulations.

Puerto Rico
FERC issued a ruling that EcoEléctrica LP’s planned LNG supply pipeline project is not subject to the agency’s mandatory pre-filing environmental review process, and that the company’s environmental assessment of the project is sufficient to comply with NEPA requirements. The company had asked FERC in April for this ruling for its proposal to install additional facilities at its existing export terminal. LNG export issues play an important part of the domestic natural gas picture as sufficient markets are seen as necessary to sustain continued development.

Texas
Frontier Logistics and Kyle Kinsel Co., developers of Mission Rail Park, will begin constructing a 550-acre rail-equipped industrial facility, situated between Big Spring, Texas and Midland, Texas. The Permian Rail Park, slated to open in second quarter 2014, will be situated in the Wolfcamp and Cline Shale plays in the Permian Basin. It’s also 100 miles of the Delaware Basin’s Bone Springs Shale, Avalon Shale and Wolfbone play. The Rail Park will serve industrial tenants ranging from large distribution and manufacturing facilities to small rail users, the developers added. It will also house oilfield service and pipeline operations that need rail to move products to and from nearby shale plays. For more information please contact HBW Resources.

The Eagle Ford Shale is pumping big money into the local economy and creating a boom in jobs. One industry in particular, is in high demand for truck drivers and the Del Mar College Transportation Service has a fairly long waiting list for that program. President of Del Mar College, Mark Escamilla says the wait list has gone from 90 days to 30. The big rig driving program will get trainees a license to drive an 18-wheeler in about a month.

West Virginia
The West Virginia Department of Environmental Protection (DEP) has told key state legislators that no additional requirements are needed to protect the air quality from horizontal oil and gas drilling.

An explosion over the weekend at a natural gas well site in West Virginia operated by Antero Resources injured at least five people, prompting state and federal investigations, local officials and Antero said. A spark triggered a flash explosion and a fire after a problem during the “flow back” process when drilling fluids are pumped into storage tanks, according to Pat Heaster, director of emergency services in Doddridge County, about 100 miles north of Charleston. Two storage tanks containing brine and fracking fluid from the well exploded at 4 a.m. EDT (0800 GMT) on Sunday Antero spokesman Alvyn Schopp said. Five workers were taken to hospital with burns, he said. For more information please contact HBW Resources.

National

U.S. oil production jumped last week to the highest level since January 1992, cutting consumption of foreign fuel and putting the U.S. closer to energy independence. Drilling techniques including hydraulic fracturing, or fracking, pushed crude output up by 134,000 barrels, or 1.8 percent, to 7.401 million barrels a day in the seven days ended July 5, the Energy Information Administration said. Rising crude supplies from oilfields including North Dakota’s Bakken shale and the Eagle Ford in Texas have helped the U.S. become the world’s largest exporter of refined fuels including gasoline and diesel. The shale boom has also helped cut world reliance on OPEC oil even as global demand gains.

The Energy and Power Subcommittee of the House Energy and Commerce Committee passed with a 17-9 vote, HR 1900 the Natural Gas Pipeline Permitting Reform Act, aimed at speeding up federal approval of permits for natural gas pipelines, an effort to help the burgeoning industry increase distribution and to reduce utility costs for consumers. Sponsored by Rep. Mike Pompeo (R, KS 4), the bill would require automatic approval of permits if agencies don’t complete application reviews within 90 days of completion of environmental studies.

A new bill would strip the U.S. Department of Energy of authority over LNG exports. HR 2471, introduced by Rep. Ted Poe (R, TX 2) would transfer the authority to review LNG export applications to the Federal Energy Regulatory Commission. The bill’s sponsors cited conflicting and unsatisfactory responses by DOE on how long the review process would take, what criteria the department would use in approving export applications, and its recent decision to give priority to projects that have pre-filed with FERC. The bill was referred to the House Foreign Affairs Committee’s Subcommittee on Terrorism, Nonproliferation and Trade. Additionally, a bipartisan group of 32 Senators sent a letter to DOE urging it to expedite LNG Permit applications.

Karen Bass (D, CA 37), introduced an amendment prohibiting the use of federal funds for hydraulic fracturing in the Inglewood Oil Field in Los Angeles, California. The amendment was rejected in a voice vote.

The American Petroleum Institute (API) said there were 8,739 oil wells drilled in the United States during the second quarter of 2013, a 9 percent increase year-over-year. The total number of natural gas wells completed during the second quarter increased 2 percent, to 12,645, compared to the same period in 2012. API statistics chief Hazem Arafa said the oil and natural gas industry was in the midst of an expansion because of access to private and state lands. For more information please contact HBW Resources.

Enterprise Products Partners L.P. is building a 1,230 mile Appalachia-to-Texas (ATEX) Express Pipeline to transport fluids from the Utica shale well fields. The pipeline will carry ethane from Ohio, Pennsylvania and West Virginia to near Houston as of the first quarter of 2014. The pipeline will stretch for 264.61 miles across 13 counties in Ohio, including: Jefferson County, Harrison, Tuscarawas, Coshocton, Muskingum, Licking, Fairfield, Pickaway, Fayette, Greene, Clinton, Warren and Butler County. The pipeline will extend from southwest Pennsylvania to Seymour, Indiana, at which point it will connect to a pre-existing Enterprise pipeline which extends through Illinois, Missouri, Arkansas, Louisiana and Texas.

Algonquin Gas Transmissions is proposing to install new pipelines, replace others and build transmission stations in the heavily populated, 200-mile New York-to-Boston corridor. The preliminary plan would build and replace about 44 miles of pipeline in Connecticut, Massachusetts, New York and Rhode Island, install a new pipeline to span the Hudson River in New York and build compressor stations to boost gas flow. The project, which would expand the current Algonquin system, would add 450,000 cubic feet of gas per day to the 2 billion cubic feet piped in daily.

This week marks the five year anniversary of the introduction of the “Pickens Plan,” a campaign to bring the issue of energy out of the back corners of American society and into the living room and front porch of every home in the United States. “Domestic oil production is at a 22-year high while domestic natural gas production is at an all-time high. All of this despite the administration’s often open antagonism toward the industry. In spite of the economic collapse, the oil and gas industry continues to provide thousands of direct jobs while producing ample fuel for the millions of Americans who depend on a boiler, a furnace, a truck or anything else that runs on oil or natural gas for them to be able to keep their jobs. If you want to blame the oil and gas industry for anything, blame it for creating too many jobs.”

A new study, Injection-Induced Earthquakes, led by researchers at Columbia University and published Friday in the journal Science suggests a strong quake that strikes halfway around the globe can set off small to mid-size quakes near injection wells in the U.S. heartland. The new research that suggests oil and gas drilling operations may make fault zones sensitive to shock waves from distant big quakes. For more information please contact HBW Resources.

Josh Fox takes another look at the “dangers” of hydraulic fracturing in his new documentary Gasland Part 2. The film argues that the gas industry’s portrayal of natural gas as a clean and safe alternative to oil is a myth, and that fracked wells inevitably leak over time, contaminating water and air, hurting families, and endangering the earth’s climate with the potent greenhouse gas, methane. … Ever since theater director-turned-filmmaker Josh Fox was approached five years ago with an unexpected offer of $100,000 for the natural gas drilling rights to his property in the Delaware River Basin, on the border of New York and Pennsylvania, he has been on a mission to investigate hydraulic fracturing. His first film, Gasland, debuted at the 2010 Sundance Film Festival and made its HBO debut later that year. Gasland Part II begins with the 2012 State of the Union Address, in which President Obama declares his support for the safe development of natural gas production. Towards the film’s conclusion, Fox is arrested trying to film a congressional hearing regarding the EPA results in Pavilion. The documentary debuted on HBO, Monday, July 8.

International

The European Parliament after months of bitter debate backed a plan to boost carbon prices, throwing a lifeline to the EU Emissions Trading System (ETS) and the bloc’s push for greener energy. EU politicians in Strasbourg voted 344-311 in favor of temporarily removing up to 900 million permits from trade, tackling oversupply that has sent carbon prices to record lows. The ETS is a cornerstone of European Union climate policy, but a much higher carbon price is needed to achieve its goal of spurring industry to invest in low-carbon energy. EU politicians voted against a plan put forward last month but agreed to allow a one-off intervention in the market to temporarily withdraw up to 900 million permits.

The Organization of Petroleum Exporting Countries (OPEC) forecast the world will need less of its crude next year, even as global oil demand growth rebounds to its strongest pace since 2010, amid competing supply sources. Demand for OPEC’s crude will slip by 300,000 barrels a day next year to 29.6 million a day next year, or about 2.6 percent less than the 12-member group is pumping now, the organization said in its first set of forecasts for 2014. The need for OPEC’s crude will diminish even as global oil demand growth recovers to 1 million barrels a day in 2014, from 800,000 a day this year, amid rising output in the U.S. and Canada. For more information please contact HBW Resources.

The death toll from last weekend’s disaster in Lac-Megantic, Quebec has reached 20 confirmed bodies, and police say the roughly 30 people still missing are almost certainly dead. CNN reports on the ongoing investigation: “The head of the railway whose runaway train devastated a small Quebec town cast doubt on his engineer’s story Wednesday as he arrived to face insults from survivors and harsh questions from reporters. Edward Burkhardt said the engineer has been suspended without pay and faces a criminal investigation by Canadian authorities. He said the engineer reported to railroad managers that he set 11 hand brakes on the train cars before they broke away from their engines, but ‘I think it’s questionable whether he did.'” The crash has raised questions about the rapidly growing use of rail to transport oil in North America, especially in the booming North Dakota oil fields and Alberta oil sands. Rail shipments of oil and petroleum products jumped 48 percent in the first half of 2013, but the pace of crude-by-rail growth is slowing, according to an analysis from the U.S. Energy Information Administration (EIA). The EIA used data from the Association of American Railroads to calculate that 1.37 million barrels per day of oil and petroleum products were shipped on railways in the first half of 2013. That’s up from about 927,000 barrels per day in the same period of 2012.

Argentina
The Governor of Neuquén Province, Jorge Sapag has said in a radio interview that Chevron and Argentine state oil company YPF (Yacimientos Petrolíferos Fiscales) will sign the final investment agreement of a deal that will see Chevron invest $1.6 billion into the Vaca Muerta shale play in Neuquén on July 16 in the capital city of Buenos Aires. According to a BNamericas report, “Chevron’s initial investment in the joint venture will provide funds to start development on a 1,000-well cluster which by December 2014 would be producing the equivalent of 30% of the province’s current petroleum output.

Australia
PetroChina has received Chinese and Australian federal government approval to acquire from ConocoPhillips a 29% stake, valued at around $29 million, in a shale gas joint venture in Western Australia’s Southern Canning Basin. PetroChina’s interest in the relatively unexplored Canning Basin follows recent investments in other Australian LNG projects. When ConocoPhillips and the Chinese state-owned oil and gas giant announced the Canning Basin deal in February, PetroChina also farmed into a 20% stake in the Poseidon gas discovery in the offshore Browse Basin.

Brazil
Brazil’s energy regulator has claimed that oil and gas companies will soon be required to test the shale gas potential at onshore exploration blocks which are being offered as part of the country’s 12th licensing round. This bidding round will take place at the end of October and will offer onshore sedimentary basins of Parana, Parecis, Parnaiba, Reconcavo, Acre and Sao Francisco. Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP) expects that these basins will contain large supplies of conventional and unconventional gas. Brazil, which produces more than 80% of its power from hydroelectric dams, is looking to generate more from gas-fired plants to avoid outages during droughts and to produce more gas domestically to cut its dependency on imports of LNG. For more information please contact HBW Resources.

Canada
More than 70 runaway tank cars filled with thousands of barrels of crude derailed and exploded in Lac-Megantic, Quebec, killing at least 13 people and incinerating 30 buildings in the town. About 35 people remain missing. The disaster intensified the debate over the safety of transporting oil by train compared to pipelines, which have their own record of spills. Shipments of oil by rail increased 17 times faster than crude production in the U.S. last year as producers use existing track to ship rising volumes from new shale fields and oil sands to market, according to figures compiled by Bloomberg. The accident has increased the debate related to the benefits of transportation via rail versus transportation via pipelines.

Malaysia’s Petroliam Nasional Bhd has approached India’s state-run Indian Oil Corp. to sell a 10% stake in its Canadian shale-gas assets. The Press Trust of India news agency reported that Indian Oil was in talks to buy the stake from the Malaysian state-run company for at least $1.5 billion. Petroliam Nasional, also known as Petronas, last year bought Canada’s Progress Energy Resources Corp. in a $5.2 billion deal that gave it access to Altares, Lily and Kahta shale-gas assets in northeastern British Columbia. In April, Petronas said it has closed a deal to sell a 10% stake in the shale-gas assets and a proposed LNG export facility to Japan Petroleum Exploration Co. For more information please contact HBW Resources.

China
Market researchers ResearchMoz published “China Natural Gas & Shale Gas Industry Report, 2012-2015.” “China is accelerating the exploration and development of shale gas and other unconventional natural gas.” In China’s energy consumption, coal accounts for over 60%, while natural gas only about 5%, far below the world average, so coal has huge development potentials in China. In recent years, China’s demand for natural gas has witnessed rapid growth, but the output growth has been slow, so that China depends on the import of natural gas heavily. In 2012, China’s potential volume of mineable shale gas hit 25 trillion cubic meters (excluding the shale gas in the Qinghai and Tibet), same with that of China’s land conventional natural gas.

For years Chinese have been told that the blinding, sooty haze choking Beijing and other cities is the price of progress. All rapidly industrializing economies have endured appalling levels of pollution, officials say. They insist that the only alternative is to slam the brakes on China’s economy and consign tens of millions to poverty. Yet China’s appetite for energy is literally killing its people. A study published in the Proceedings of the National Academy of Sciences illustrates how deadly China’s growth path has become. Analyzing data compiled between 1980 and 2000, the authors estimated that pollution caused by burning coal stripped five years from the life expectancy of Chinese in the northern half of the country — a collective loss of 2.5 billion years. A separate study published in December in the Lancet attributed about a million deaths a year in China to air pollution.

Chinese and U.S. officials met to discuss energy issues as part of the two-day U.S.-China Strategic and Economic Dialogue in Washington this week. As the world’s largest energy consumer, China is also scouting for oil and gas supplies abroad to feed its energy appetite. China already has about $5.5 billion invested in U.S. natural gas, and said it also welcomes greater American investment in China’s own energy industry, the U.S. administration official said.

India
India’s rising gas import bill, which apparently induced the government to incentivize production of domestic gas by doubling its price, could be contained to a large extent once the country commences import of shale gas from the US. Public sector gas marketer GAIL (India), readying to commence shale gas imports from 2016-17 estimates that under the initial contracts, the fuel could be priced at $10-11 per mmBtu, considerably cheaper than the likely LNG import price of $14-17 per mmBtu from other sources like Qatar and Australia in the period. GAIL has executed an LNG offtake agreement with Cheniere Energy Partners for importing 3.5 million tons per annum (mtpa) from the US starting 2017-18. GAIL has also booked a 20-year terminal service agreement with Dominion Resources for supplying 2.3 mtpa of shale gas from 2017. Apart from this, the company has acquired a 20% interest in Carrizo’s Eagle Ford Shale acreage which is currently under development. For more information please contact HBW Resources.

An Indian energy think tank has raised a red flag over a government proposal to advance shale gas exploration, saying the country’s severe water shortage would rule out fracking to extract any gas found.
India will also need a long time to identify shale gas-rich basins and to acquire the technology and experience required to extract the gas, said The Energy and Resources Institute in its “Shale Gas in India: Look Before you Leap” policy paper. A group of ministers is currently considering a draft government policy released last year for the exploration and exploitation of shale gas in India, after the success of such projects in the US made it self-sufficient in natural gas and a net exporter. No final decision has yet been reached. The Ministry of Petroleum and Natural Gas has identified six basins as potentially shale gas-bearing: Cambay, Assam-Arakan, Gondwana, Krishna-Godavari, Kaveri and Indo-Gangetic. A US Geological Survey study showed recoverable resources of 6.1 trillion cubic feet have been estimated in three out of 26 sedimentary basins in the country.

Aggressive exports of LNG from the U.S. could help set the stage for stronger trade relationships with Indian and other developing South Asia nations, experts agreed during a discussion at the Center for Strategic and International Studies (CSIS). According to CSIS’ recent report, “U.S. Energy Exports to India: A Game Changer,” India currently imports 75% of its energy and that is expected to rise to 90% by 2023. India is also the world’s 6th largest LNG importer in the world. Currently, there have been three deals signed between Indian and U.S. energy companies. India has 63 trillion cubic feet of estimated shale gas reserves.

Iran 
Iran’s ambition to exploit the world’s biggest natural gas reserves, stymied for years by U.S. sanctions, faces an even sterner test as rising global output and the North American shale boom threaten to erode prices. The Persian Gulf state would need a decade to build planned export capacity of at least 40 million metric tons a year of liquefied natural gas even if unfettered by economic curbs over its nuclear program. The U.S. and European Union already restrict Iran’s largest revenue source, crude exports, and the financial industry that enables payments for them. The constraints have cut Iranian crude sales by half since 2011, the International Energy Agency said, and are stifling projects to export some of Iran’s 1,187 trillion cubic feet of gas reserves, about 18 percent of the global total.

Lithuania
Despite establishing its independence from the Soviet Union over two decades ago, Lithuania is still dependent on Russia’s OAO Gazprom for its gas supply. Gazprom holds a near monopoly in Lithuania, which has no energy resources of its own and shut down its nuclear plants as a condition to admission to the European Union. As a result, the costs of gas import are 15% above the European average. Lithuania’s Prime Minister Algirdas Butkevicius announced that Chevron was ready to cooperate with the residents of the districts where the shale-gas exploration was planned. Lithuanian oil and gas exploration company LL Investicijos, whose 50% stake belongs to Chevron, announced that it was planning to begin soon exploratory drilling by Stempliai village in the district of Silute. For more information please contact HBW Resources.

Mexico
Mexico is heading towards much-needed energy sector reform, and with two of the country’s three major political parties in broad alignment on energy goals, major changes to the sector look more likely than ever, according to attorneys in the energy practice of law firm Mayer Brown. Mexico is major oil producer, and one of the top sources of US imports, according to the Energy Information Administration. The EIA’s most recent study shows Mexico’s estimated shale gas resources at 545 trillion cubic feet, ranking it 6th of 41 non-US countries. The country is a major importer of natural gas, despite its large resources, and consumption has continued to rise steadily. Imported volumes from the US more than doubled from 2007 to 2012, according to EIA data. Mexico cannot rely solely on piped gas from the US to meet its needs. “Mexico has relatively poor gas transportation infrastructure, so not all the gas that can be imported from the US by pipeline can effectively reach all the demand centers in Mexico,” Jose Valera, a partner with Mayer Brown, said. The country also imports LNG. “Mexico is having to buy LNG on the spot market to bring in more gas, but at very high prices – $14, $15, even $17 per million Btu,” Valera said. But political conditions may finally be conducive to moving forward with reforms that have failed in the past, with two of the country’s three major political parties – the National Action Party (PAN) and the Institutional Revolutionary Party (PRI) – backing energy reform.

Poland
The Polish Exploration and Production Industry Organization (OPPPW) issued a statement that criticizes part of the government’s draft hydrocarbon extraction law. The organization claims some of the regulations will increase investment risk. The OPPPW is questioning proposed rules regarding the granting of extraction licenses, which they see as arbitrary, and the National Energy Resources Operator (NOKE). It also expressed its concern about the fact that the exploration period may be extended only once, and only for two years.

Chevron plans to continue its shale gas exploration activities in Poland, but would like the government to be more open to dialogue with investors. The company referred to a draft regulation on hydrocarbon extraction recently prepared by the Polish Ministry of Environment and submitted to the government for approval. Chevron has four concessions in southeastern Poland, although the company has already stopped any exploration work on one of them (Frampol) for now. Another one near the village of Żurawłów is facing protests from the local community. For more information please contact HBW Resources.

FX Energy said test results from tight gas wells in Poland have been disappointing. The company said it has finished testing on three wells at the top of the Rotliegend tight sandstone area, in western Poland’s Permian Basin. The wells, which have been hydraulically fracked, produced only non-commercial levels of gas as well as formation water. Poland’s state-run oil and gas company, PGNiG, has a 51% stake in the Fences concession, where the test wells were drilled. PGNiG also operates the licence, which covers 1,647 square kms. FX Energy holds the remaining 49%. Last month the EIA downgraded its estimates of Poland’s shale gas reserves from 5.3 trillion cm in a 2011 study, to 4.2 trillion cm in this year’s report.

Saudi Arabia
Saudi Arabia has intensified drilling for gas as it seeks to reduce pressure on oil demand from domestic power stations, according to rig count data and industry officials. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. The number of rigs active in the kingdom, the world’s largest oil exporter, climbed to 150 at the start of June, from 134 at the start of the year, according to Barclays. Gulf industry officials said they expected the Saudi rig count to top 200 this year or early in 2014. The jump is partly due to the ramping up of production at the new Manifa oilfield and also reflects increased drilling for gas, which is important to the government’s plans to maintain domestic flexibility so it can meet increased demand for oil from its export customers.

Spain
Repsol SA (REP), Spain’s largest oil producer, delayed starting to explore for shale gas in the north, where a local government has outlawed drilling projects that use water-intensive hydraulic fracturing. The company had targeted July to begin seismic studies at its Luena project that extends over 290 square miles across the Cantabria region, where energy trade groups say Spain’s richest shale gas deposits lie. In April, the Cantabrian government enacted Spain’s first ban on the use of hydraulic fracturing, blaming risks of polluting drinking water. The rule blocks companies seeking to blast water into shale deposits within the region’s boundaries, though it’s less clear how projects extending to other regions are affected. Luena stretches from Cantabria to Castille & Leon, a situation that normally would be regulated by the nation’s Industry Ministry, exploration companies say. Spain has enough prospective natural-gas resources to satisfy more than 70 years of domestic demand, according to the Spanish fossil fuels trade group Aciep. For more information please contact HBW Resources.

Turkey
The Turkish government has ruled out domestic shale-gas exploration before 2020 because of a lack of data and investment. Turkey’s energy minister, Taner Yildiz said. The minister has previously said the Ankara, Konya, Thrace and Nevsehir regions could all be explored for shale gas. Yıldız noted that data from the International Energy Agency (IEA) also suggest that shale gas in the country cannot be used before 2020 as it would take between three to 15 years to study the feasibility of such a project while attracting international investments. Turkey’s state-run oil and gas company, TPAO, struck a deal with Shell in 2011 to explore for shale gas in the southeastern region of Diyarbakir.

Ukraine 
Royal Dutch Shell is interested in developing both traditional and shale gas deposits in Ukraine, the company’s executive said at a meeting with the country’s prime minister. Shell and Ukraine could cooperate in developing both traditional and shale gas reserves, Shell’s upstream international director, Andrew Brown, is cited as saying by the government’s website Thursday. Ukrainian Prime Minister Mykola Azarov invited Shell to develop “not only shale gas, but also gas from traditional reserves”. Ukraine, which holds Europe’s third-largest shale gas reserves, sees the development of its energy resources as vital for reducing its dependence on Russian gas imports.

United Kingdom
Cuadrilla has announced that it intends to apply for planning consent to hydraulically fracture and test the shale at its existing exploration well at Grange Hill. It has also announced that it intends over time to apply for consent to drill, hydraulically fracture and test the gas flow at up to six new temporary exploration well sites in the Fylde. A decision on drilling and testing at the existing Anna’s Road site will be deferred until later in the exploration program. For more information please contact HBW Resources.

Managing Director of Egdon Resources, an oil and gas exploration and production company focused on onshore UK and Europe, Mark Abbott, commented on the recent publication of a number of government initiatives and reports in relation to shale gas and the wider onshore UK oil and gas industry. Abbott stated in a press release, that Egdon “was encouraged by the government’s commitment to publish in July 2013 a package of measures designed to ‘kick-start’ the shale gas industry in the UK.  The publication by the Department for Communities and Local Government of planning guidance for onshore oil and gas (including shale gas) should provide a clear framework for how such developments should proceed through the planning system.  We also look forward to the outcome of the consultation on a “pad allowance” in relation to taxation for shale gas which should provide clarity on the fiscal regime and we welcome the commitment of the Environment Agency to streamline and simplify environmental regulation of onshore oil and gas activities.”

Britain’s energy secretary Ed Davey has advocated a public awareness campaign to promote shale gas and dispel the “myths” surrounding fracking, the controversial method for unlocking the natural gas. The British Geological Survey estimated that Britain holds larger amounts of shale gas than previously estimated.

Uruguay
Petrel Energy’s two hole 2000 meter core drilling program, to test the oil/gas potential of its extensive 3.5 million acre basin play in Uruguay is expected to commence in August. It will target organic rich shales in the Norte Basin to test parameters critical for source and reservoir rock evaluation, of similar age shale plays to extensive basins such as the Bakken of North America. Requisite government and landholder approvals have been submitted by Schuepbach Energy International (SEI). SEI is a private US company, which holds a 100% working interest in Piedra Sola and Salto concessions in the Norte Basin Uruguay. The two concessions cover 14,000 sq km (3.5 million acres). Petrel Energy currently holds a 25% interest in SEI and has an option to increase its shareholding to 51% later in 2013 for US$5.5 million. The first two core holes will allow SEI to determine the distribution of organic-rich shales and other potential reservoirs and will be followed by seismic acquisition to guide follow-up exploration drilling and resource distribution.

Additional Information

For additional information, please contact Bo Ollison with HBW Resources.  His contact information is below.

Bo Ollison
HBW Resources
2211 Norfolk Street, #410
Houston, TX 77098
Tel: 713-337-8810
E-mail: bollison@hbwresources.com
Web: http://www.hbwresources.com
Twitter: @BoOllison

Contact Information

If you have any general questions, please contact us anytime. Previous versions of the HBW Ollison Hydraulic Fracturing Report, the HBW Greenfield Offshore Energy Report, the Forsgren Environmental Report, and daily updates and new Member profiles can be viewed at the new Intelligence Tab on the HBW Resources website at:http://hbwresources.com/intelligence/.  Hope you all have a great day!

Thanks,

Michael Zehr
HBW Resources
1666 K Street, NW, Suite 500
Washington, DC 20006
Direct: 202-429-6081
Cell: 202-277-3927
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